LONDON Feb 9 (Reuters) - Russian gas export monopoly
Gazprom warned of environmental risks from shale gas drilling
in the United States and Europe on Tuesday, but said it
expected its gas to be able to compete with shale gas prices
even if production expands.

Last week, Gazprom said it was delaying development of the
Shtokman field, one of the world's largest, which it hoped
would supply liquefied natural gas to the United States, citing
expansion of U.S. shale gas production and the subsequent fall
in U.S. gas prices.

Shale gas production involves extracting gas from rock
through the use of hydraulic fracturing -- where water, sand
and chemicals are pumped into formations at pressures high
enough to crack the rock and allow gas to escape.

Environmentalists and critics say the drilling chemicals
have polluted aquifers in Pennsylvania and Colorado and can
cause cancer and other serious illnesses.

Medvedev said Gazprom was keenly awaiting the results of
investigations by the U.S. Environmental Protection Agency into
shale gas drilling.

Medvedev said last year that Gazprom, the world's largest
gas producer, aimed to take a 10 percent share of the U.S.
natural gas market within five years, largely by exporting LNG,
but analysts say the expansion of shale gas production makes
this unlikely.

Much of the gas was supposed to come from Shtokman, which
has been delayed for three years. Medvedev said that phase 1 of
the project was still targeting production of 23.6 billion
cubic metres a year.

He declined to confirm the $15 billion budget for the first
phase as he said it was possible this could rise 25 percent to
30 percent.
(Reporting by Tom Bergin; Editing by Walter Bagley)

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